Major depressive disorder (MDD) in children and adolescents is a serious psychiatric disorder causing substantial morbidity and mortality. Until recently the lack of clear empirical evidence of effective pharmacological treatment for acute treatment has made irrelevant research on the efficacy of continuation treatment. Having completed a double-blind placebo controlled trial of fluoxetine in MDD, this application aims to extend our work in the psychopharmacological treatment of MDD in children and adolescents, by studying a) the effectiveness of continuation of medical treatment; b) social school, family and cognitive outcomes following acute treatment and continuation treatment; and c) predictors of treatment non-response and relapse. The proposed study will consist of two phases; acute open treatment (12 weeks) and randomized placebo controlled discontinuation (6 months). Two hundred child and adolescent outpatients (ages 8-18 years) with MDD following a two week diagnostic evaluation, will be treated with fluoxetine (10-40mg) for 12 weeks. Responders of acute treatment (n=120) will be randomized to pill placebo or to continue same dose of fluoxetine, and will be followed for an additional 24 weeks. The primary outcome variable will be response to acute treatment and relapse during continuation phase treatment. There have been no studies of need for continuation treatment in depression in the pediatric age group.